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Chafee to reduce restaurant tax request by one percent

May 16, 2012

Governor Lincoln Chafee will announce over the next day or two that he will shave one percent off of his proposal to raise the state’s meals tax by two percent. Chafee said in an interview with RIPR yesterday that the recent State Revenue Estimating Conference projects that show RI tax revenues coming in higher than anticipated have led him to ask for a one-cent, rather than a 2-cent tax hike on each dollar spent in local restaurants.

At one percent, Chafee said, the tax would harvest about $19 million in new revenue. The top priority for the new revenue would be to ensure that the state can maintain investments in K-12 education aid, particularly in accelerating the phase-in of the new education funding formula designed to help cash-strapped urban communities, such as Providence.

The two-percent increase proposal met with vigorous opposition from the state’s restaurant and hotel industry and had garnered scant support among lawmakers. At the time Chafee proposed the two-percent hike, he told RIPR that he would reduce it by a penny per dollar if revenues came in stronger than anticipated.

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